Legacy firms are playing catchup on flexible payment plans even as consultancy firm Mckinsey says instalment payment will dominate sales this year.
Mapping sales trends to watch in 2023, the global firm says instalment payment plans, or “buy now, pay later” (BNPL) have been growing six folds year-on-year since 2018 and will top sales and marketing trends this year.
Previously offered by mostly in-store electronic retailers and furniture companies, old-school firms have started to embrace it to tap into young consumers who favour the flexibility of modern instalment payments.
The global buy now pay later market is projected to grow from $22.86 billion (Sh2.8 trillion) in 2022 to $90.51 billion (Sh11.2 trillion) by 2029, exhibiting a Compound Annual Growth Rate of 21.7 per cent.
The BNPL and instalment payment industry in Kenya has recorded strong growth over the last four quarters.
This was mainly supported by increased e-commerce penetration along with the impact of economic slowdown due to disruption caused by the Covid-19 outbreak.
The research firm says this form of selling grew by 107.8 per cent on annual basis to reach $521.8 million in 2022 and is expected to grow steadily over the forecast period, recording a CAGR of 52.5 per cent during 2022-2028.
On Tuesday, Davis & Shirtliff followed this trend, launching a new mobile application system that allows customers to make partial savings towards the purchase of water and energy equipment.
“We've had many customers make inquiries of our products at different selling points but walk without the item just because the price is higher than the amount they had,'' Davis & Shirtliff managing director for Kenya Edward Davis said.
According to him, many of these customers never come back which means they may likely use the amount they had on something else hence a loss of business opportunity.
The plan allows a change of product midway and refunds when the customer no longer needs a selected item.
Late last year, LG Electronics launched its "No cash, No Worry" campaign Thursday, enabling customers to buy goods with a 60-day holiday offer, just a day after Samsung announced a similar waiver, in a bid to spur consumption amidst an ongoing cash crunch.
Other brands that have embraced this in Kenya include Dr.Mattress, Victoria Furniture and the kitchenware brand Newmatic.
The popularity of this trend has seen Lipa Later, a Kenyan tech-led consumer credit platform, planning to expand to new markets in Africa after raising $12 million (Sh1.5 billion) .
The startup, a buy now, pay later (BNPL) company founded in 2018, is now planning to enter Tanzania, Ghana and Nigeria, and expand in its existing markets, which are Kenya, Uganda and Rwanda.
